South Africa and coal

South Africa is the fifth largest hard coal producer in the world and a major exporter of coal into the world market. It is also heavily dependent on coal for power generation and is aiming to rapidly expand its coal-based generation capacity. It is also a major exporter of power to utilities in neighboring countries and directly to some major individual customers in Mozambique and Namibia.

Background
South Africa, which is estimated to have produced 244 million tonnes of coal in 2006, is ranked as the world's fifth largest hard coal producer, behind China, the USA, India and Australia. In 2005 it was estimated that coal-fired power stations accounted for approximately 93% of South Africa's electricity production and were the dominant domestic coal consumer. Approximately one-third of domestic coal consumption is used by Sasol as the source for synthetic fuel and chemicals production. South Africa has also become a major player in the global coal trade, exporting an estimated 69 million tonnes in 2006. The bulk of this is exported to Germany, Spain and Japan.

According to Eskom, the publicly owned electricity utility, 53% of domestic consumption is used for electricity generation with a further "12% for metallurgical industries (Iscor) and 2% for domestic heating and cooking." In a brief review of alternatives to coal, Eskom confines its considerations to major centralised power station options of gas, hydro and nuclear. It argues that domestic gas and hydro resources are limited, importing hydro power from the Zaire River basin could be unreliable due to political instability but is a little more up-beat about its as yet unproven pebble-bed nuclear reactors. No other options were considered. Instead it places its faith in "clean coal" technologies. "There are many existing and emerging clean coal technologies that will enable the production, processing, conveyance and utilisation of coal in a more environmentally compatible manner," it states.

South Africa is also a significant exporter of power to neighbouring countries and a small number of major consumers. In March 2010 the Minister for Public Enterprises, Barbara Hogan, told parliament that South Africa exported approximately 1 200GWh of power per month, representing 5.95% for 2009. She also explained that power is also imported and that the net exports was 0.73% of the total electricity available for distribution. Power is exported under contracts with national electricity utilities in Botswana (Botswana Power Corporation, Namibia (NamPower), Lesotho (the Lesotho Electricity Company LEC), Swaziland (Swaziland Electricity Company - SEC) and occasionally to Zimbabwe (Zimbabwe Electricity Supply Authority - ZESA) and Zambia (Zambia Electricity Supply Corporation ZESCO). These exports are done as part of the South African Power Pool agreement and their "non-firm agreements with Eskom", she said. Hogan also explained that electricity is also supplied to the Motraco aluminium smelter in Mozambique, Skorpion Zinc for its zinc mine in Namibia and Namdeb for its diamond mine in Namibia.

Government Energy Policy
After years of substantial overcapacity, the recent rapid growth of the South African economy and generation constraints led the South African government to propose a massive expansion of the electricity generation system. However, instead of relying solely on the publicly owned electricity utility, Eskom, to undertake the expansion, the government directed that 30% of the new capacity be provided by independent power producers. In 2004 the South African Cabinet approved a total five-year expansion plan costing R93 billion with Eskom funding R84 billion of that. Subsequently, Eskom increased its projected electricity demand forecast from 2.3% per annum to 4% and is now planning to spend R150 billion in the five-year period to 2011-2012 in order to cater for the government's target gross domestic product growth rate of 6%. "Under the revised plan, we will deliver an additional 22 000 megawatts (MW) by 2017," states Eskom.

Eskom proposes that it would meet the proposed massive expansion by a mix of new coal, gas, nuclear power stations as well as some demand side management and renewables.

The utility states that, as of November 2007, there are currently 11,941 megawatts of plants in the "project execution phase". Of this it reported that 1577 megawatts has already been commissioned.

Other "in execution" generation projects that are as yet uncompleted comprise
 * the construction of six new coal-fired 6-900 megawatt units (for between 3,600 megawatts and 5,400 megawatts capacity);
 * the recommissioning of previously mothballed power stations providing 3,600 megawatts (see list below);
 * the construction of the Ingula Pumped Storage Scheme hydro scheme with four 333 megawatt turbines (for 1332 megawatts of installed capacity) to provide increased peaking capacity;
 * the construction of fourteen 150 megawatt open cycle gas units for a total of 2,100 megawatts installed capacity;
 * a 100 megawatt wind farm.

In the wake of widespread blackouts, described by the Department of Minerals and Energy as "load shedding", the South African government re-iterated in January 2008 the need for urgent measures to increase the ability of the electricity system to cater for peak demand and allow sufficient time for necessary maintenance. Setting a target of having 15% reserve peak capacity, the government cautioned that in the absence of major changes that "the risk of risk of load shedding will remain high until at least 2013."

The government also noted that "the price of electricity in South Africa is very low compared to other countries around the world. Many countries have also embarked upon large build programmes and the gap between South Africa and the rest of the world is widening.". In particular it noted that the "‘Gap’ to next cheapest [country] increased to 74% in 2007 from 30% in 2006", that "current pricing is half of the replacement value of power plant" and that "increases above inflation will be needed to fund capacity expansion." To help fund the cost of the massive construction programme, Eskom has been granted permission to increase its electricity tariff by 27.5 percent in the 2008/09 financial year.

Rapid domestic demand for electricity prompted the South African utility, Eskom, to cut back power exports to neighboring countries. For example, Eskom power exports to Botswana have been cut back and will cease entirely in 2012 when its contract expires. This has had the spillover effect of has prompting the Botswana Power Corporation, a government owned utility, to build the Morupule B power station. Eskom also exported power to Swaziland, Lesotho, and Namibian utilities as well as having agreements with individual customers in Mozambique and Namibia.

Eskom's contracts with other countries are of longer duration than Botswana's. The contract with Namibia runs through to June 2017, while the contract with Swaziland runs through to December 2024. The contract with Lesotho is "indefinite". The contract for the Motraco aluminum smelter runs from December 1997 through to December 2025, the Skorpion zinc mines from August 2000 through to January 2018 and Namdeb from October 1986 for an indefinite period.

Existing Coal-Fired Power Stations
Existing Eskom power stations are :

Coal-fired stations

 * Arnot Power Station: 2,140 MW installed capacity comprising 4 X 350 MW units and 2 X 370MW units. The power station is located at Middelburg, Mpumalanga; Eskom plans to commission 60 megawatts upgrades in 2008, a further 60 megawatts in each of 2009 and a further 30 megawatts in 2010.
 * Camden Power Station: 1,580 MW installed capacity comprising 6 X 200 MW units and 2 X 190 MW units. The power station is located at Ermelo, Mpumalanga. In 2007 Eskom recommissioned 390 megawatts and plans to recommission a further 390 megawatts in 2008. The station is now online.
 * Duvha Power Station: 3,600 MW installed capacity comprising 6 X 600 MW units.The power station is located at Witbank, Mpumalanga
 * Hendrina Power Station: 2,000 MW installed capacity comprising 10 X 200 MW units. The power station is located at Hendrina, Mpumalanga.
 * Kendal Power Station: 4,116 MW installed capacity comprising 6 X 686 MW units. The power station is located at Witbank, Mpumalanga.
 * Kriel Power Station: 3,000 MW installed capacity comprising 6 X 500 MW units. The power station is located at Kriel, Mpumalanga.
 * Lethabo Power Station: 3,708 MW installed capacity comprising 6 X 618 MW units. The power station is located at Sasolburg, Free State.
 * Majuba Power Station: 4,110 MW installed capacity comprising 3 X 657 MW units and 3 X 713 MW units. The power station is located at Volksrust, Mpumalanga.
 * Matimba Power Station: 3,990 MW installed capacity comprising 6 X 665 MW units. The power station is located at Ellisras, Northern Province.
 * Matla Power Station: 3,600 MW installed capacity comprising 6 X 600 MW units. The power station is located at Kriel, Mpumalanga.
 * Tutuka Power Station: 3,654 MW installed capacity comprising 6 X 609 MW units. The power station is located at Standerton, Mpumalanga.

Currently Mothballed coal-fired stations being recommissioned
The following coal-fired power stations were mothballed in 1990 but are currently in the process of being recommissioned, which started in 2005.
 * Grootvlei Power Station: 1 200 MW installed capacity comprising 6 X 200 MW units. The power station is located at Balfour, Mpumalanga. Eskom plans to recommission 585 megawatts in each of 2008 and 2009;
 * Komati Power Station: 1 000 MW installed capacity comprising 5 X 100 MW units and 4 X 125 MW units. The power station is located at Middelburg, Mpumalanga. Eskom plans to recommission 120 megawatts in 2008, 240 megawatts in 2009, 320 megawatts in 2010 and 285 megawatts in 2001;

New Coal-Fired Power Stations
As part of its "new build" expansion plan, Eskom plans on building two new coal-fired power stations. These are: See the Eskom article for details of the utility's gas-fired, nuclear and hydro power stations.
 * the 4,788 megawatt Medupi Power Station is proposed to be progressively commissioned from 2013 (803 megawatts in 2012, 1,596 megawatts in 2013, 798 megwatts in 2014 and a further 1,596 in 2015.
 * the 3,212 megawatt Kusile Power Station is proposed to be progressively commissioned from 2012 (798 megawatts in 2013, 1,606 megawatts in 2014 and a further 803 megwatts in 2015.

In response to a request from Eskom for expressions of interest from private power producers, the Perth, Australia-based energy company, the Aviva Corporation, announced that it had expressed interest in developing the notional Mmamantswe Coal Project in Botswana as a major coal mine with an associated power station.

Coal-fired power stations financed by international public investment institutions
Coal-fired power stations financed by international public investment institutions include:
 * Arnot power station, South Africa
 * Kelvin power station, South Africa
 * Kusile Power Station), South Africa
 * Medupi power station, South Africa

Environmentalists Oppose World Bank Loan to Eskom
In late February 2010, climate change activists and concerned individuals from about the world expressed concern that the World Bank would fund new coal-fired power stations proposed by the South African government-owned utility, Eskom. One of the projects is the Medupi power station, a 4800 megawatt plant under construction in Lephalale in the country's northern region of Limpopo.

Groups opposing the project, which includes Climate Justice Now, groundWork and the Federation for a Sustainable Environment, vowed to pressure country directors within the World Bank to vote against the loan and also said they would revive the World Bank "bond boycott" that was launched last decade to end structural adjustment programs and anti-environmental project funded by the Bank.

Inger Andersen, World Bank's director for sustainable development in Africa, said the loan would support the "responsible use of coal as an interim resource for power generation, given lack of viable alternatives". The opposition groups countered, that if granted, the loan would destroy the image the World Bank is portraying of a climate-friendly financier. In order to power the new coal plants, over 40 new mines would have to be opened up in the region. The proposed plants would also increase utility rates to consumers. Large environmental groups such as the Sierra Club have signed on to a petition that opposes the loan.

On March 8, 2010 it was announced that the UK and US threatened to withhold support for a World Bank loan intended to help South Africa build the new coal-fired power station. The UK and US opposed to the loan because they believe it will make it harder for South Africa to deliver emission cuts.

On April 8, 2010 the World Bank voted to approve a $3.75 billion loan as requested by the South African government. The United States abstained from voting on the measure. It was the first World Bank loan to the country since the fall of Apartheid in the mid-1990s.

Critics, however, were not pleased with the World Bank's decision to fund the coal plant, even though the loan had provisions for other energy technologies like wind and solar. "I think it's pretty clear the World Bank is telling the people of South Africa that they're not taking their commitments to alleviating poverty and climate change seriously," said Mark Kresowik, corporate accountability and finance representative for the Sierra Club's 'Beyond Coal' campaign. Other countries that abstained from the vote included the U.K., Netherlands and Italy.

Eskom Plant Gets Funding Approval from U.S. Bank for Kusile Power Station
On April, 14, 2011 Black & Veatch Corp. won preliminary approval for $805.6 million in financing from the U.S. Export-Import Bank for a coal-fired power plant in South Africa, a move that drew criticism from environmental groups. Eskom's Kusile Power Station, to be constructed in South Africa's Mpumalanga Province, will include six units and have a total capacity of 4,800 megawatts.

U.S. Congress has 35 days to comment on the deal.

“Ex-Im Bank directors’ decision to support Kusile was made despite their full knowledge of the unacceptable damage the project will cause,” said Sunita Dubey, U.S. representative of Groundwork South Africa, a group opposing Kusile. They “disregarded the impact on people’s health and livelihoods.”

Coal-to-liquids projects

 * Mafutha Coal-to-Liquids project; Sasol is undertaking a pre-feasibility study for the project. In its 2009 annual report the company states that the plant would be aimed at the South African liquid fuels market and that "we look forward to working together with our partners, the Industrial Development Corporation and the government, to advance this important initiative."

Major Coal Mines
The U.S. Geological Survey lists the major coal mining operations and their 2005 production levels as being:


 * Anglo Coal Ltd, a wholly owned subsidiary of Anglo American plc, Bank, Goedehoop, Isibonelo, Kleinkopje Kriel, Landau, Mafube, New Denmark, New Vaal, and Nooitgedacht Mines which produced 57 million tonnes


 * BHP Billiton Energy Coal South Africa, a wholly owned subsidiary of BHP Billiton, operates a number of coal mines in the Witbank Coalfield, Mpumalanga Province. (BHP Billiton Energy Coal South Africa was, up until the end of January 2007, known as Ingwe Collieries Ltd. ). In the year to June 2008, BHP Billiton Energy Coal South Africa produced approximately 48 million tonnes of coal for both the export and domestic markets. BHP Billiton Energy Coal South Africa's mines and projects are:
 * Douglas Mine (Xstrata plc, 16% interest) which produced 8.5 million tonnes
 * Middelburg mine (Xstrata plc, 16% interest) which produced 17 million tonnes
 * Khutala underground mine which produced 15.1 million tonnes
 * Klipspruit mine which produced 3.6 million tonnes


 * Zululand Anthracite Colliery, a wholly owned subsidiary of (BHP Billiton, Zululand Mine, KwaZulu Natal Province which produced 600,000 tonnes of anthracite.


 * Sasol Ltd which operates the following mines in Secunda:
 * Twistdraai Mine which produced 14.2 million tonnes
 * Brandspruit Mine which produced 8.5 million tonnes
 * Middlebult Mine which produced 8.5 million tonnes
 * Syferfontein Mine which produced 8.2 million tonnes


 * Eyesizwe Coal (Pty.) Ltd. Arnot, Glisa, Mafube, Matla, and New Clydesdale collieries which produced 25 million tonnes


 * Kumba Resources Ltd., 66% owned by Anglo American
 * Grootegeluk coal mine, 120 kilometers north of Thabazimbi which produced 17 million tonnes
 * Leeuwpan Colliery in Mpumalanga province which produced 2.7 million tonnes
 * Tshikondeni Mine in Venda which produced 600,000 tonnes


 * Xstrata plc
 * Tweefontein Division (Boschmans, Goedgevonden South Witbank, Waterpan, and Witcons Mines) at Witbank which produced 6.5 million tonnes;
 * has a 50% interest in ATC and ATCOM Mines at Witbank which produced 4.1 million tonnes;
 * has a 50% interest in Mpumalanga Division (Spitzkop and Tselentis mines at Breyton and Ermelo) which produced 2.9 million tonnes;
 * has a 50% interest in iMpunzi Division (Phoenix and Tavistock mines) at Witbank which produced 2.8 million tonnes;


 * Anker Holdings
 * B.V.Elandsfontein Mine which produced 2.04 million tonnes
 * Golfview Mine which produced 1.7 million tonnes


 * Kangra Group Pty. Ltd which operates the Savmore and Welgedacht collieries which produced 3 million tonnes;


 * Wakefield Investments (Pty.) Ltd. has a 74% interest in the MetorexBankfontein, Lakeside, Leeuwfontein, and Middleburg Townlands Mines which produced 2.3 million tonnes.


 * Total Coal SA (Pty.) Ltd which operates the Dorsfontein and Forzando Mines which produced 2 million tonnes


 * Graspan Colliery Pty Ltd which operates the Graspan Mine which produced 1.8 million tonnes.


 * Kuyasa Mining (Pty.) Ltd operates the Delmas Mine which produced 1.2 million tonnes.


 * Forbes Coal owns the Magdalena bituminous and the Aviemore anthracite mines in the KwaZulu Natal province, which have a measured and indicated resource base of 54.2M t bituminous coal.

China's Datong seeking SA coal mines
In November 2010, China's third-largest state-owned producer, Datong Coal Mine Group, said it is seeking coal mines in South Africa and other selected countries (Australia, Indonesia, and Russia), and plans to invest "tens of billions" in the new energy sector as part of its five-year development plan. President Wu Yongping of Datong ‒ the parent of the Shanghai-listed Datong Coal Industry Company Limited ‒ commented: “We are mainly looking at partnerships in these overseas ventures, but we won't rule out developing any mines on our own.”

Coal Exports
As of 2011, South Africa is the world's sixth largest coal producer and fifth largest exporter. In 2009 it produced 247Mt of hard coal, of which 27% was exported. 99% of its exports were thermal coal. Historically the country's largest export operations were owned by Anglo American, BHP Billiton and Xstrata. Richards Bay Coal Terminal in South Africa was once the world's largest coal export terminal.

In September 2010, Bloomberg reported that coal prices from South Africa may rise to a two-year high as sales surge to India and China. South Africa accounts for about 30 percent of India’s thermal coal imports, according to coal ministry data. Shipments in the first eight months of 2010 increased to 13.3 million tons, while China’s purchases surged to 4.7 million tons, according to mjunction Services Ltd., a Kolkata-based trader backed by Tata Steel Ltd. and Steel Authority of India Ltd., two of the country’s three biggest coking-coal consumers. South Africa, the world’s fifth-largest coal producer, is selling more to Asia than to Europe for the first time, according to mjunction. Purchases by Asia in the first eight months totaled 29 million tons as Asian economies rebounded while Europe brought in 5.8 million tons, mjunction said.

In early January 2011, MMTC, India's largest state-run trading company, announced that India was going to increase its coal imports from South Africa. Indian demand for South Africa’s coal contributed to Asia overtaking Europe in 2009 as the largest shipping destination for the fuel used in power plants.

2010: Studies suggest South Africa reaching peak coal
Recent research from three scientific journals suggest that usable coal reserves in South Africa are much smaller than previously thought, and that annual production could reach a peak and begin to decline within a decade -- or might have peaked already. Jeremy Wakeford, chair of the Association for the Study of Peak Oil (Aspo) in South Africa, discussed the studies in the organisation's latest newsletter, and how they challenge the "commonly believed [idea] that South Africa has abundant coal reserves which will last 200 years or more... given the country's overwhelming dependence on coal, this issue has huge ramifications for our future development path."

"Peak" refers to the theory that production in commodities such as oil grows until a peak is reached, whereafter production declines. In the case of South African coal, recent studies are suggesting production has already reached its peak, or soon will. Coal provides 70% of the country's energy supply, supports 90% of electricity generation, is used to make a quarter of the country's liquid synfuels using the Sasol process, and is a big earner of foreign exchange through exports to foreign users. Geologist Chris Hartnady, in a paper to be published in the SA Journal of Science, has forecast peak production in 2020 at about 285-million tonnes a year.

Homes, drinking water from reclaimed coal waste
Anglo American, a mining company using the eMalahleni water reclamation plant in the Mpumalanga province of South Africa, is turning coal waste (gypsum) into houses. The plant turns up to 200 tons of gypsum a day into bricks, which is says could provide up to 7,000 houses a year. As of June 2011, 66 three-bedroom houses have been built, and 300 more will be built by December.

The water reclamation plant also purifies water from five mines, and turns it into drinking water. The water reclamation plant is a public-private partnership by Anglo Thermal Coal, BHP Billiton Energy Coal South Africa (BECSA) and the Emalahleni Local Municipality.

Greenpeace dumps coal at Eskom
On June 27, 2011, Greenpeace protesters blocked one of the entrances of the Eskom headquarters with five tons of coal, to publicly demand that Eskom stop the construction of the Kusile Power Station and shift to renewables. The activists held banners calling on Eskom to clean up its act and stop coal.

Kusile coal-fired power plant will be one of the biggest coal-fired power stations in the world, with 4,800 MW of power production, using 17 million tons of coal per year. According to Greenpeace, the action highlighted the true cost of Eskom’s addiction to coal: environmental destruction at every step, the pollution of scarce water supplies, and the destruction of people’s health and wellbeing.

Greenpeace Africa’s climate and energy campaigner Melita Steele said: “To date, Eskom’s investments in renewable energy are limited to tiny projects of 100MW of wind and 100MW of solar. This illustrates Eskom’s lack of commitment to a sustainable future for South Africa.”

Greenpeace Africa’s 2011 report, "The Advanced Energy (R)evolution", says that South Africa - as the largest CO2 emitter on the continent, and the 12th largest in the world - has a moral responsibility to address climate change, and that switching to 50% renewables by 2030 would create 150,000 direct jobs.

According to Steele, “Greenpeace has tried repeatedly to engage with Eskom about its addiction to coal and nuclear energy. Eskom has however not shown any intention of changing its tune. Today Greenpeace publicly calls on Eskom to clean up its act."

Citizens Groups Campaigning on Climate Change

 * Earthlife Africa
 * Climate Justice Now
 * groundWork
 * Federation for a Sustainable Environment

South Africa specific articles

 * Department of Minerals and Energy (South Africa)
 * Eskom
 * Nuclear power in South Africa
 * Richards Bay Coal Terminal
 * South African Centre for Carbon Capture and Storage
 * Carbon Capture and Storage in South Africa

International articles

 * Global use and production of coal
 * Australia and coal
 * Britain and coal
 * China and coal
 * Colombia and coal
 * Germany and coal
 * Indonesia and coal
 * Japan and coal
 * New Zealand and coal
 * United States and coal

External resources

 * Alison Hughes, Mary Haw, Harald Winkler, Andrew Marquard, Bruno Merven (Energy Research Centre, University of Cape Town), Energy Emissions: A modelling input into the Long Term Mitigation Scenarios process, Department of Environment Affairs and Tourism, South Africa, October 2007. (This report estimates current and future emissions in South Africa from the power generation sector).

External Articles

 * "Introduction to the South African Coal Industry" Forbes Coal, accessed July 2011.
 * International Energy Agency, "Coal in South Africa in 2005", International Energy Agency website, accessed June 2008.
 * U.S. Geological Survey, South Africa 1994-2005
 * South African government, "National Response to South Africa's Electricity Shortage", January 2008.
 * Khadija Sharife, "South Africa: Country's Dirty Secret - Eskom and the Medupi Power Plant", AllAfrica.com, May 14, 2010